CGT on house left to husband

getmore4less

You need to read up on interest on possession trusts and the taxation of the trust assets regarding both cgt and IHT of the life tenants.

If this is a proper trust there may be no cgt.

This should have been investigated as part of the estate management as life interests for non spouse can have unexpected interactions.

xylophone

What exactly were the terms of Uncle's will?

Has an IIP Trust been created?

If so, who are the Trustees?

Have a look at this - http://www.taxationweb.co.uk/forum/interest-in-possession-trust-t9789.html

Keep_pedalling

Icey77 wrote: »

The invoices were paid by my husband, the invoices were kept by my in laws because that's where the work was done and we live 3 hrs drive away. They wanted to keep the paperwork so that if anything needed to be produced to remedy something that went wrong they could produce it.

My in laws are in their 80's and not hugely Internet or pc literate and like to cold hard facts and paperwork in their hands. I'm not "pulling it from a magic hat" I simply asked them to give me all the paperwork relating to work on on the house between the date of my husbands uncles death and the date of the house sale.

Since the tax return and the tax payable is not due until 31st January I was trying to get everything ready so that it's not a mad rush at the deadline.

Yes, my in laws had the right to live in the house and now the current flat they live in but it is owned by my husband. They moved in with my husbands uncle several years before he died to care for him as he had a terminal disease. The sale was completed by a reputable solicitor.

I'm not trying to pull a fast one or duck out of paying any tax that is due, I am simply trying to ensure we claim what we are allowed to claim. I do not have much knowledge about CGT hence why I'm asking here. I am waiting for a CGT technician from hmrc to call me back but this could talk up to 5 days.

I greatly appreciate he help I've had so far but please understand this is a subject I am new to. Thank you.

I don't think any of the posters here think you are trying to pull a fast one, and you are right to ask these questions, after all not many people will be in this situation and even fewer will have the knowledge to deal with it correctly.

I don't know if the fact that your husband has provided them with alternative accommodation effects matters, but given the complexity of the situation you may find that your best course of action is to engage a tax specialist to advise you.

getmore4less

This all points to the hubby only being the legal owner as trustee of an IIP trust that was supposed to provide accommodation for life.

This is an extremely common situation and also has IHT implications for the parents.

antrobus

getmore4less wrote: »

This all points to the hubby only being the legal owner as trustee of an IIP trust that was supposed to provide accommodation for life....

I am inclined to think that the OP has a another tax return to complete for the trust.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/504367/sa900-2016.pdf

Icey77

Here is the clause from the will that relates to the house:

4a
i - 'Dwelling' means a freehold or leasehold house bungalow maisonette flat or flatlet in the United Kingdom and any grounds belonging to it
ii - 'my house' means my house known as XXX together with its grounds or other the dwelling which I may own (or hold under a lease) as my principal residence at my death
iii - 'the contents' means all my furniture furnishings and household effects except any otherwise given by this will or any codicil to it
iv - 'the Beneficiaries' means my sister JIW and her husband EGW
v - 'my trusties' means my executors or the trustees of this will for the time being

4b
IF EITHER OF THE Beneficiaries survive me by 28 days I GIVE my house (free of tax and free of any money charged or otherwise secured on it which shall be paid free of tax out of my residuary estate as shall the cost of discharging any security and any interest falling due before discharge) and the Contents (fee of tax) to my Trustees ON TRUST to sell it (subject always to subclause (c) below

4c
MY TRUSTEES shall allow the Beneficiaries to reside in my house and to have the use of the Contents so long as the Beneficiaries may wish and shall not exercise their power to sell except with the Beneficiaries' written consent (but without prejudice to the provisions of (f) below)

4d
IF the Beneficiaries in writing so request my Trustees may in their absolute discretion sell the Dwelling currently held by them under this clause and with the net proceeds of sale acquire any other suitable Dwelling reasonably designated by the Beneficiaries of which the total acquisition cost does not exceed those proceeds and shall hold it on the trusts with and subject to the powers and provisions of this clause BUT if on any such exchange there remains any surplus money in the hands of my Trustees they shall treat it as an immediate accretion to my residuary estate

4e
THE BENEFICIARIES shall at all times pay all outgoings in respect of any Dwelling currently held under this clause (and observe and perform all the covenants and conditions contained in any lease under which it may be held) and keep it in good repair and shall keep it and the Contents insured comprehensively and to their full reinstatement or replacement value with insurers approved by my Trustees and in the joint names of the Beneficiaries and them

4f
IF AT ANY TIME the Benficiaries cease to reside in the Dwelling currently held under this clause (otherwise than through temporary absence or for the purpose of making an exchange provided for in (d) above) or five written consent (otherwise than for that purpose) or become permanently incapable of residing there or die or fail for a period which my Trustees in their discretion consider unreasonable to perform any of the obligations mentioned in (e) above then the Beneficiaries' rights under this clause shall end and my Trustees shall treat any property held under it as an immediate accretion to my residuary estate

=====================================

I hope this might clarify things a little, as suggested I will look for tax specialist that I can make an appointment with to review and advise - I assume this cost would be an allowable expense?

kidmugsy

Looks like an IIP trust then. If so the house wasn't left to your husband, but to the trust with your husband as the remainderman and presumably the, or a, trustee.

If his parents lived in the house before is was sold as their Principal Private Residence, then there should be no CGT to pay. If they didn't I suspect (but do not know) that the CGT bill will fall on them, so allowing use of two £11,100 allowances.

But I repeat my key question: what does your solicitor say?

Icey77

kidmugsy wrote: »

Looks like an IIP trust then. If so the house wasn't left to your husband, but to the trust with your husband as the remainderman and presumably the, or a, trustee.

If his parents lived in the house before is was sold as their Principal Private Residence, then there should be no CGT to pay. If they didn't I suspect (but do not know) that the CGT bill will fall on them, so allowing use of two £11,100 allowances.

But I repeat my key question: what does your solicitor say?

I haven't consulted with a solicitor yet, I had just started to pull the paperwork together for the tax return - good thing I haven't left it to late January!!

Do I need a tax specialist or a solicitor? If it is a solicitor do we need to use the solicitor that wrote the will? That could be problematic as they are 3 hours drive from where we live and I have two small children at home.

getmore4less

You seem to have completely misunderstood what this will set up.

Step back and start again going back to understanding the trust as set up by the will and its tax.

You need to understand legal and beneficial ownership.

now the trust has sold an bought another property what that means for the trust and IHT for the parents.

Icey77

Well, for something that started as what I thought was a simple query has morphed into something very big and scary!

All this talk of trusts and further IHT issues is bewildering and worrying. im now concerned that my in laws have no idea of their responsibilities as expected from HMRC and I will end up sorting the whole lot out, what an education.